US inflation is ‘uncomfortably’ high, means what yeah.

US inflation is ‘uncomfortably’ high, means what yeah.

Everyone hates inflation, I think. I could not think of any reason why people love inflation except those who are hoping for prices to rise to gain benefits from it. Maybe this includes people who hoard goods just so that they could sell it at a higher price the next week for example. When inflation is high… then the central bank may step in to control inflation. This is usually done via an increase in rates. However, if inflation is high and the economy is slowing, then the central bank would have to decide which is more critical. Growth in economy or growth in prices.

Article in nst.com.my US inflation remains “uncomfortably” above the Federal Reserve’s target despite the progress it has made in recent months, a senior bank official said Saturday.

The Fed’s favored inflation gauge now sits at an annual rate of just 2.5 percent – well below the peak reached in 2022 – while the US economy is still growing and the labor market has weakened somewhat.

Against this backdrop, Fed chair Jerome Powell suggested in late July that the bank could move ahead with its first interest rate cut as soon as September – if economic data continues to come in as expected.

“The progress in lowering inflation during May and June is a welcome development,” Fed governor Michelle Bowman told a conference in Colorado Springs, according to prepared remarks. “But inflation is still uncomfortably above the committee’s two percent goal.” Article in nst.com.my

Zero inflation is not helpful even if high inflation is not welcomed

A low inflation also tells us that the demand for goods and services are increasing in a controlled manner. Demand did not suddenly rise too fast which forced prices to move upwards. When supply has to increase, then the production of the supply has to be increased. More people would be needed and more economic growth is generated too. So, inflation is needed but governments would always want to keep in under control.

Let’s hope US’s economy is doing well enough to warrant an interest cut.

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